CH10 - Fixed Assets and Intangible Assets

Question 1

A depreciation method that provides for a higher depreciation amount in the first year of the asset’s use, followed by a gradually declining amount of depreciation.

Answer 1

accelerated depreciation method

Question 2

The periodic transfer of the cost of an intangible asset to expense.

Answer 2

amortization

Question 3

The cost of a fixed asset minus accumulated depreciation on the asset.

Answer 3

book value

Question 4

The amount a buyer owes a seller when a fixed asset is traded in on a similar asset.

Answer 4

boot

Question 5

The costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.

Answer 5

capital expenditures

Question 6

A lease that includes one or more provisions that result in treating the leased assets as purchased assets in the accounts.

Answer 6

capital lease

Question 7

An exclusive right to publish and sell a -literary, artistic, or musical composition.

Answer 7

copyright

Question 8

The process of transferring the cost of natural resources to an expense account.

Answer 8

depletion

Question 9

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

Answer 9

depreciation

Question 10

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.

Answer 10

double-declining-balance method

Question 11

The number of dollars of sales that are generated from each dollar of average fixed assets during the year, computed by dividing the net sales by the average net fixed assets.

Answer 11

fixed asset turnover ratio

Question 12

Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.

Answer 12

fixed assets

Question 13

An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.

Answer 13

goodwill

Question 14

Long-term assets that are useful in the operations of a business, are not held for sale, and are without physical qualities.

Answer 14

intangible assets

Question 15

A lease that does not meet the criteria for capital leases and thus is accounted for as an operating expense.

Answer 15

operating lease

Question 16

Exclusive rights to produce and sell goods with one or more unique features.

Answer 16

patents

Question 17

The estimated value of a fixed asset at the end of its useful life.

Answer 17

residual value

Question 18

Costs that benefit only the current period or costs incurred for normal maintenance and repairs of fixed assets.

Answer 18

revenue expenditures

Question 19

A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.

Answer 19

straight-line method

Question 20

The amount a seller allows a buyer for a fixed asset that is traded in for a similar asset.

Answer 20

trade-in allowance

Question 21

A name, term, or symbol used to identify a business and its products.

Answer 21

trademark

Question 22

A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset.

Answer 22

units-of-output method